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Duke is one of only two top-ten universities to offer merit scholarships.

… Though some critics of merit aid programs say the scholarships can take resources away from students who need financial help most, University administrators say this is not the case for Duke. The University maintains eight merit scholarship programs while also growing the amount that is given to students with financial need, according to Melissa Maouf, director of the Office of Undergraduate Scholars & Fellows.

“Our merit communities are a mixed bag, economically all over the place,” Malouf, wrote in an email Wednesday. “All students to apply to Duke may be considered for a merit scholarship—rich or poor or in between.

Only three Duke scholarships are solely merit-based.

Three of the eight scholarship programs Duke offers—the Angier B. Duke Scholarship, the Benjamin N. Duke Scholarship and the Robertson Scholarship—solely take merit into account. The remaining five scholarship programs consider a mixture of merit and need.

Nearly 4% of Duke students receive merit aid.

In 2013, Duke provided merit scholarships averaging about $56,000 per year to 314 students, nearly 4 percent of the undergraduate body, according to the 2013-14 CDS survey.

Only one other top-ten school, the University of Chicago, also offers merit awards. All the other schools only give need-based financial aid.

The fast-growing federal program known as Parent PLUS now serves 3.2 million borrowers, who have racked up $65 billion in debt helping their kids go to school. The loans have much in common with the regular student loans that have created a national debt crisis and a 2016 campaign issue, but PLUS has much higher interest rates and fees, and far fewer opportunities for loan forgiveness or reductions.

Should student loans generate profits for the federal government?

In fact, the PLUS program, which includes similar loans to graduate students, is the most profitable of the 120 or so federal lending programs. That sounds like a good thing, until you remember the government’s profit comes from its own citizens, often citizens of modest means.

Student loans enhance accessibility, but at what cost?

… PLUS loans have also become a key revenue source for many schools, particularly historically black colleges and for-profits that tend to serve lower-income families.

But that just illustrates the increasingly tortured economic paradoxes at the heart of modern higher education, where schools have no incentive to provide affordable prices as long as they can count on federal dollars for making education affordable. Ultimately, Parent PLUS sluices more cash into the college-industrial complex, helping educators jack up their tuitions while pressuring parents to make up the difference with debt, while doing nothing to ensure they’re getting a real return on their investment. It enhances accessibility, but not really affordability, simply giving parents a way to punt the skyrocketing costs into the future.

Underwriting standards are lax, and the government lends money to “people with no clue if they can pay it back”.

Many critics argue that Parent PLUS should be abolished, and that the government should expand Pell grants and raise caps on student loans instead. But even those who want to continue the program — including Rodriguez in the White House and Republican staffers on Capitol Hill — seem to agree there are relatively obvious ways to strengthen it. The most evident would be real underwriting standards to evaluate the ability to pay of potential borrowers. Another would be strict loan caps. Or a combination of those reforms could link the creditworthiness of borrowers to the size of the loans they’re eligible to receive, the kind of calculation real banks make. Even Draeger, who represents aid administrators at 3,000 colleges and universities, said the system needs structural changes to protect vulnerable families.

My main concern with the Parent Plus loan is the lack of consumer disclosures regarding future pymts and the cost of credit – there are none. I borrowed $24,000 this week – it took about 5 minutes – with no evaluation of my qualification to repay – and no disclosure to me of what my future pymts will be. I can see very easily how someone could get in over their head.

The major challenge to reforming the Parent PLUS program is its “immense profitability”.

… These days, the government borrows money at almost no cost, so lending at 7 percent plus fees can add up: Parent PLUS could reduce the deficit by $3 billion this year. That means any effort to scale it back and restrict it to creditworthy borrowers would cost the government a lot of money….

Years later, I found myself confronted with a choice that too many people have had to and will have to face. I could give up what had become my vocation (in my case, being a writer) and take a job that I didn’t want in order to repay the huge debt I had accumulated in college and graduate school. Or I could take what I had been led to believe was both the morally and legally reprehensible step of defaulting on my student loans, which was the only way I could survive without wasting my life in a job that had nothing to do with my particular usefulness to society.

I chose life. That is to say, I defaulted on my student loans.

As difficult as it has been, I’ve never looked back. The millions of young people today, who collectively owe over $1 trillion in loans, may want to consider my example.

First, he tells people to get as many credit cards as they can before they stop repaying their student loans. This way, presumably, you will have plenty of credit available once your credit report is ruined and you can’t get new cards. But card issuers are constantly checking the credit of existing cardholders to look for distress signals. If they see any, they may lower your limits or close your accounts….

The second piece of advice Mr. Siegel has for aspiring defaulters is to establish a good history of paying rent. This can work, as long as you rent from a landlord who never checks your credit or a new one who relies on your old landlord’s good word.

But many landlords do check and won’t be sympathetic, especially in tight markets. Besides, plenty of people don’t want to be tenants forever, given how hard it can be to find rentals in some good school districts. Others want to plant roots and build home equity.

Will those defaulters be able to qualify for a mortgage? A judgment resulting from a default may stay on your credit report for up to 10 years….

Bank of America, one of the biggest home lenders, did not comment on whether people with defaults on their credit record would be able to get mortgages, and a Wells Fargo spokeswoman declined to categorically rule out the possibility that someone could qualify for a loan within the tarnished-credit window.

But Richard M. Bettencourt Jr., the secretary of the National Association of Mortgage Brokers and a lender himself with a company called Mortgage Network in Danvers, Mass., said he had never seen people with student loan defaults on their credit records get a mortgage….

Which brings us to Mr. Siegel’s third piece of advice: Marry well, or at least have a creditworthy partner. Then, that person can be the sole mortgage applicant. Mr. Siegel’s wife bought the home where they live, according to public records.

There are a number of problems with this approach. Some lenders may not allow it, since certain low down-payment loans in community property states require both spouses to apply, according to Wells Fargo. Of course, you’ll need to talk someone into coupling up with you in the first place, after explaining that you’re not so big on financial obligations but that you really, truly intend to honor marital ones.

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Lee Siegel, “Why I Defaulted on My Student Loans”, New York Times, June 6, 2015.

Ron Lieber, “Taking On Student Debt, and Refusing to Pay”, New York Times, June 15, 2015.

Federal law makes debt counseling mandatory for first-time borrowers, but “because the topic is dense and the department’s content is devoid of anecdotes, it’s tough to make the lessons stick”. Most colleges use the Department of Education’s online counseling module, which apparently most students find difficult to navigate and comprehend. What type of counseling would work to make students clearly realize what they were getting themselves into before it was too late?

The ideas from the article seem helpful, but some of them, like requiring a course during the first year of college, are only applicable after the money has been borrowed. Plus that recommendation seems to be overkill and costly.

Delivering supplemental counseling, ideally in a face-to-face setting, in order to help answer questions

Providing sample budget sheets using local cost-of-living expenses

Ultimately, it is the student’s responsibility to take the time to fully understand the implications of college debt. Maybe students who borrow should have to pass a pre-entrance exam that covers practical knowledge about how loans will affect their personal financial situation.

A lecture hall is likely near the bottom of your list of preferred summer destinations. After a long year in school, many students prefer to use their breaks to recharge, not re-enroll. In addition, the summer months offer a great opportunity to work a full-time job and earn money to pay for the upcoming year.

However, enrolling in summer classes can actually be a smart way to decrease college costs. For one, the classes themselves can be cheaper, especially if you opt to attend a less expensive community college. You’ll just need to make sure any credits transfer.

Additional costs could be less expensive too. For instance, since fewer people enroll in the summer, you’ll likely have an easier time finding affordable, used textbooks.

The biggest potential savings come from accelerating your graduation date. By taking summer credits throughout college, you could shave a term or even an entire year off your education. That not only equals savings in the form of tuition payments, but it also cuts down on room, board, and other living expenses, not to mention getting you into the workforce and earning a salary faster.

Considering that almost half of all full-time college students take five or more years to graduate, that last benefit listed may make a difference in helping you graduate within four years.

Like this:

It’s best to file your FAFSA early because colleges may run out of financial aid funds for later applicants. But filing early often means that income tax information must be estimated and then later corrected.

Estimating your income may be a simple matter of using the previous year’s number and adjusting slightly. Or, if your financial circumstances have changed considerably it may require more work. FAFSA has an income estimator on their site that may be helpful.

After income taxes are filed, you must submit corrected information to FAFSA. In most cases, you can use their IRS Data Retrieval Tool for a relatively painless process. Otherwise, the process is more time-consuming because you will need to request that a copy of your tax return be sent to your school.

Among its “tips for deciphering financial-aid letters”, the Wall Street Journal includes information that can be useful in evaluating student loan offers.

Difference between subsidized and unsubsidized federal student loans

The federal government pays interest charges on federally subsidized loans while a student is in school, for example, which can help borrowers substantially. Such loans are generally given to students who demonstrate some kind of financial need, but students don’t need to come from low-income families to qualify.

Just over 34% of undergraduates with family income of at least $100,000 received subsidized Stafford loans at colleges where total annual costs, including tuition and room and board, were at least $30,000 in 2011-12, according to an analysis by Edvisors of the most recent federal data available. Just 12% of such students received the loans when attending less-expensive colleges.

Unsubsidized federal loans can be less desirable because interest accrues while the student is in school, which—if unpaid—could result in a significantly larger balance by the time the student graduates. Some colleges don’t include unsubsidized loans in financial-aid offers.

Colleges and universities also may offer their own loans, which may or not be preferable. Compare and contrast the terms on offer, including the interest rate and when interest charges begin to boost the outstanding balance.

In most cases, creditors are unable to touch tax refunds. Not so with student loans.

While credit card companies and other private debt collectors are barred from garnishing money coming to taxpayers from Uncle Sam, some federal and state creditors can help themselves to tax refunds via a process known as ‘offsetting.’ Under the Treasury Offset Program, these entities get a whack at your tax refund if you have an outstanding debt in certain categories, including:

past-due child support payments

back taxes

any unemployment compensation owed to the state

past-due student loans

This is another reason to pay your student loans on time, or better yet, make sure you only take on as much debt as you can afford to pay back.

Like this:

Don’t wait until your child’s senior year of high school to begin planning how to pay for college. The first 18 years go quickly, and it’s never too soon to begin preparing.

Here’s one simplified approach showing some important steps along the timeline to college, with a focus on the financial planning aspect of the process.

Before High School

Start saving for college ASAP: This is the relatively uncomplicated part. Although we can’t predict the costs of college over a child’s lifetime, it almost always makes sense to begin saving early on. Even if MOOCs or other innovations make higher education more affordable in the future, there’s usually not much of a risk in saving too much since there are options for dealing with “left-over money in your 529 plan”.

Before Junior Year of High School

NMS potential: If your child tends to score in the 95%ile of standardized tests, he may have a shot at earning a National Merit Scholarship. A little test prep can make the difference in qualifying for significant merit financial aid.

Base Income Year (BIY): If there is a chance your family may qualify for need-based financial aid, you should explore ways to minimize income during the BIY, the 12-month period that begins January 1 during your child’s junior year. Since the BIY is used as a snapshot for determining financial need, you may want to consider strategies such as not selling stocks or property that will create large capital gains, refrain from converting to a Roth IRA, or defer bonus or other income.

Junior Year of High School

Create list of schools: Get serious and make a realistic list that includes academic and financial safeties.

Can we afford it? 1-2-3: Determine affordability by using the 1-2-3 Method or something similar.

Senior Year of High School

Senior year is the busiest time for families as they handle the many details of the college application process, including final determination of how they will be paying. Some important acronyms:

The two main forms used in determining financial aid eligibility are the FAFSA and PROFILE.FAFSA is the acronym for Free Application for Federal Financial Aid. It is a form submitted to the government that collects the financial information needed to decide your eligibility for federal FA. It’s also used by many colleges to determine institutional aid.PROFILE is a financial aid application service offered by the College Board, used by about 400 colleges to learn if students qualify for non-federal student aid. There is a fee to submit a PROFILE, whereby the FAFSA is free.

While this outline only hits the highlights along the road to paying for college, it can be used as a springboard for further research and action. It makes sense to start with an outline, and then fill in the details as you go along.